Hurlbert v. Weaver

| Minn. | Aug 7, 1877

Cornell, J.

So far as necessary to be stated or considered in reference to any legal questions involved in this case* the following are substantially the facts as found by the court below:

Defendant William Weaver, being the owner in fee and in possession of the premises in question, duly gave to one Brooks a first mortgage thereon, to secure a certain indebtedness of his therein named, and also a second mortgage thereon, in which his wife, the said defendant Lueretia, joined, to one Foster, to secure another debt of his to the latter.

Both these mortgages having been duly foreclosed, and the period of redemption having expired, Foster, as a redemptioner from the first and purchaser under the last foreclosure, became the absolute owner in fee of said premises, with the right of immediate possession. Afterwards, on the first day of April, 1866, Foster being still such owner, though not in possession, and the said Weaver, who yet retained possession of the premises, “had a general settlement and liquidation of all matters and mutual claims or accounts with each other up to that time, by which it was ascertained and agreed that there was due Foster from Weaver the sum of $2,678. In making up and fixing this amount they included and took into account the amount which Foster had paid Brooks to redeem from the first mortgage, and also the amount for which Foster had bid in the premises in question on the foreclosure of the mortgage thereon from Weaver and wife to himself. Both these sums were included in and went to make up this balance of $2,678, and in this settlement were treated as existing claims in favor of Foster and against Weaver; ” that, as part of the agreement of settlement, Foster was to reconvey the land to Weaver, and the latter was to give his promissory note for the amount found due on the settlement, and execute back to Foster a mortgage on the premises to secure the note. In carrying out the agreement the note was given at the time, stating on its face that it was secured by a mortgage, but for some cause neither the mortgage, nor the deed from Foster to Weaver, was in fact then executed. ffhe note was thereupon, before maturity, transferred by Foster to one Huff, and while the latter held the same as owner, to-wit, on the seventeenth day of September, 1866, Weaver and his wife Lucretia, for the purpose of carrying out the understanding between F. and W. at the settlement, executed, as and for the mortgage then agreed upon, a mortgage to Huff upon the said premises, containing full covenants of title, to secure said note, which was duly recorded October 3, 1866. Becoming the lawful and Iona fide owner of this mortgage upon a valuable consideration, plaintiff duly foreclosed the ■same, and bid in the premises as purchaser, without any knowledge or notice, constructive or otherwise, of any antagonistic claim on the part of Mrs. Weaver. The period of redemption having expired, his rights in this action rest upon the validity of such mortgage and foreclosure as against her. It further appears, from the findings of the court, that Foster, on October 18, 1866, executed and delivered to said defendant Lucretia a deed of conveyance in fee simple of said premises; that no consideration, however, was paid by her at the time, or received from her by Foster, but the real and only consideration therefor was the said note executed by Weaver, the husband, to Foster on the settlement; and it is also found as a fact that this deed was likewise given “for the purpose of carrying out the understanding” between F. and W., at the settlement, in reference to the transfer of the title from the former to the latter. This deed was not recorded till December 20, 1871, long after the foreclosure of plaintiff’s mortgage, nor was the same brought to his notice till that time.

Upon these facts the question is presented whether Mrs. Weaver will be permitted in a court of equity to make use of this deed, executed and delivered for the sole and specific purpose of consummating the agreement of settlement between her husband and Foster, and upon no other consideration, and of her legal title thereunder, to defeat the lien upon the property intended to be created by then’ mortgage to Huff. Tt is expressly found that the deed and mortgage were given as separate parts of one transaction. Both originated in andi had reference to the agreement of settlement, and were given for the sole purpose of carrying it into effect according to the original understanding of the parties thereto. Had they, in fact, been both executed and delivered at the same time, and as contemplated by the agreement, no question could possibly have arisen concerning the priority of either, or that the title which was passed by the deed to Mrs. Weaver was subjected to the lien created by the mortgage.

The mere fact that the parties inadvertently omitted their execution and delivery in the exact time and manner intended, ought not, and cannot, preclude a court of equity from treating them, when executed and delivered in pursuance and furtherance of the agreement, as having both been made and delivered when they ought to have been, and giving them effect accordingly. The question is wholly unembarrassed by any intervening equities, accrued since the agreement of settlement, in respect either to the parties thereto or to third persons. Both Foster and Weaver have acted upon the settlement and received its benefits, the former by the transfer of the note and mortgage, and the appropriation of the avails thereof to his own use, and the latter by continuing in the possession, use, and occupancy of the premises, under the-agreement, as the equitable owner, entitled to the fee, mortgaging the same to secure the payment of his own debt, and' obtaining, as must be assumed from the findings, the transfer of the legal title to his wife, as a trustee for his benefit, at least to the extent of such his mortgaged indebtedness to Foster.

Moreover, it appears that the parties, Weaver and Foster, had mutual dealings and accounts between themselves, extending over a period anterior to the date of the settlement - in April, 1866, which were embraced and adjusted in the settlement. It is manifest if such settlement is to be now opened, and the parties thereto remitted to their legal rights, the statute of limitations might be interposed to the possible prejudice of one or other of the parties. Under these circumstances to permit Mrs. Weaver to make use of the legal title "which she received under this deed, With full knowledge of all the facts, and upon no other consideration than that growing out of the settlement between ber husband and Foster, to the prejudice of the mortgage security originating in the same settlement and in the hands of a bona fide holder for value, would allow such an inequitable and fraudulent use of the instrument as ought not to be tolerated in a court of equity.

Order affirmed.